Beginning in 1949, the Bureau of Reclamation began construction of a dam on the forks of the Grand River for crop irrigation and flood control. Shadehill Reservoir formed part of the larger Pick-Sloan Missouri Basin Program for the conservation, control, and use of water in the Missouri River Basin, including various dams in Montana, Wyoming, North Dakota, South Dakota, Nebraska, and Kansas. Construction was completed in late 1951, more than a year ahead of schedule, at a total cost of roughly $5 million. Shadehill Dam and Reservoir took their name from a nearby hill south of the dam, which had been named after Colonel M. L. Shade, a member of the State Highway Commission who assisted with the construction of Highway 73. After it was determined that water flowing into the reservoir from the Grand River was too saline, the Bureau of Reclamation dropped the irrigation phase and used the dam and reservoir primarily for flood control, silt control, wildlife conservation, and recreation.